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Goldman is bullish on gold, noting last year's breakdown of the correlation between real...

Goldman is bullish on gold, noting last year's breakdown of the correlation between real interest rates and the metal's price is about to reassert itself (when real rates fall, gold rises). Seeing a weak economy prompting more easing by the Fed and a drop in real rates, gold should return to above $1,800. Gold -0.5% to $1,678.
Comments (21)
  • As I am heavy on Gold and Silver do you think we will get to $1800 on Gold and $40 on Silver this year. Would like to liquidate this year before LT Capital Gains probably goes to 20%? I have huge gains, but trying to maximize. Have slowly been selling off some over the last 6-8 months in rises.

     

    Looking for feedback from an expert.

     

    Thanks,
    28 Mar 2012, 07:49 AM Reply Like
  • William - I am no expert but you and I are in the same boat exactly! Thinking that if something bad happens in either Greece, Portugal, or Iran Gold is likely to spike. That is what I am looking at.
    28 Mar 2012, 08:54 AM Reply Like
  • You might be interested in my 1st Quarter report and a forthcoming article.

     

    My price targets for gold late this year/early next year are $2700-2850 gold and $75 silver.
    28 Mar 2012, 11:58 AM Reply Like
  • I should mention as well that I was at the PDAC in Toronto a few weeks ago looking over 400 mining companies.

     

    I seriously felt like a kid in a candy store all over again.

     

    For the women, imagine being alone at a 90% off sale in Neiman Marcus.

     

    It was that good.
    28 Mar 2012, 12:06 PM Reply Like
  • $1800 and $40 were my first quarter price targets.
    28 Mar 2012, 12:11 PM Reply Like
  • But did gold spike during the Greece crisis? I don't recall that it did significantly, and so I take this as confirmation that gold has stopped behaving like a safe haven. Gold's price is powered by many factors too numerous and complex to describe here. And I don't claim to understand how they interact anyway.

     

    What I do understand is the gold is supposed to go up when stocks go down -- and it hasn't been doing that for a long time now. When it doesn't behave as a safe haven, there are plenty of retrospective explanations: its the dollar, or its the traders, or the central banks, or the Chinese are buying houses instead of gold, etc etc.

     

    Each time gold disappoints, the gold bugs come up with a different explanation, which does us no good; no use keeping an eye peeled for the same factor that screwed up gold this time, because next time it will be a different factor.

     

    In this there are two consistencies: (1) we cannot rely on gold to protect our assets in tough times; and (2) gold bugs will never stop predicting that gold is poised for a run to the stars. (The problem is, their definition of "poised" and mine are quite different. By "poised" I mean during my lifetime.)
    28 Mar 2012, 09:20 PM Reply Like
  • I am not a gold bug. I am a hedger with Gold. I agree on the point that Gold has correlated highly with the stock market which has removed some of the hedging power. I think the reason for this are ETFs like GLD which has psychologically turned Gold into a stock and not a commodity.

     

    However, Gold is still a "limited supply" commodity and i view it as a currency hedge (depends which currency you buy your Gold in). It is also still conceived of as a safe haven to many investors. Gold has been going up for years so it is hard to point to one event. The commenter was looking for an exit point, not a long term view on Gold which I think works in cycles, much like everything else in the economy.
    29 Mar 2012, 09:43 AM Reply Like
  • I just bought May CMX 1700 GOLD calls
    28 Mar 2012, 08:51 AM Reply Like
  • I am sorry to hear about your loss.
    28 Mar 2012, 01:49 PM Reply Like
  • He he he. Good one!
    28 Mar 2012, 09:20 PM Reply Like
  • It sounds like William and Michael own paper gold and silver. These are derivatives and should be traded as such.
    28 Mar 2012, 09:05 AM Reply Like
  • They are derivatives but lets not forget what happened to those holding physical with MF Global.
    28 Mar 2012, 12:00 PM Reply Like
  • the phrase "holding physical with MF Global" is a complete oxymoron. If you don't hold it, you don't own it.
    28 Mar 2012, 02:13 PM Reply Like
  • A number of investors had physical in storage registered to their name with MF Global and have been fighting in bankruptcy to get their physical back. They have tickets proving ownership but there are questions surrounding if they should be a part of the bankruptcy.
    28 Mar 2012, 02:19 PM Reply Like
  • What is a half oxymoron?
    28 Mar 2012, 09:21 PM Reply Like
  • really? this is the best thing GS can proffer for investment? although I agree that the price will increase for the reasons stated, I'd expect much more from anyone who thinks they're a savvy investor.
    28 Mar 2012, 09:14 AM Reply Like
  • Wednesday, March 28, 7:20 AM Goldman is bullish on gold, noting last year's breakdown of the correlation between real interest rates and the metal's price is about to reassert itself (when real rates fall, gold rises). Seeing a weak economy prompting more easing by the Fed and a drop in real rates, gold should return to above $1,800.
    28 Mar 2012, 10:20 AM Reply Like
  • But if Goldman is bullish on gold, does this mean they foresee a decline and want to dump their gold before average investors realize the reality? If past performance is the only guide we have for the future, and we remember Goldman's recommendation of sub-prime mortgages, then this is the most likely construction to put on Goldman's bullish call on gold.
    28 Mar 2012, 09:24 PM Reply Like
  • lol Good call Goldman.
    28 Mar 2012, 01:48 PM Reply Like
  • Goldman was bullish on oil at $150 in the summer of 2008, and before that bullish on MBS early 2007.
    28 Mar 2012, 11:21 PM Reply Like
  • Thanks to all of you! Lot's of good thoughts. I am still hanging on to about a 1/4 Mill of various. CEF, PHYS and SLV
    29 Mar 2012, 08:22 AM Reply Like
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